Auto insurance is a necessary expense for any Canadian driving on public roads. While drivers in Quebec pay much less than drivers from British Columbia or Ontario, it’s still not a casual out of pocket expense. While true pay as you go car insurance doesn’t exist in Canada, drivers still have the option of breaking their annual premium down into monthly payments.
Auto Insurance Terms in Canada
The most common policy type in Canada carries a one-year term. A motorist purchases 121 months of car insurance coverage for an agreed premium. Some drivers pay this as a lump sum annually. Others may opt to pay it month to month. Both options are generally available in any province or territory, including Quebec, Manitoba, Saskatchewan and BC, the four provinces with public insurance programs in place.
It’s common for insurance companies to charge a small administrative fee to set up monthly payments. This is usually less than 2 percent. The rate depends on the province, provincial regulations and the insurance company in question.
Advantages to monthly auto insurance premiums
The prime advantage is, of course, the spread of the expense over the year, rather than a single lump payment at renewal time. For drivers on tight budgets, this can be a godsend.
In the case where a motorist’s insurance needs change within the year, monthly payments won’t save money but will help expedite the cost of those changes. For instance, if a driver decides to take a vehicle off the road for the winter months, they might cancel collision coverage and reduce liability coverage to the minimum while the vehicle is stored. This could have a major effect on monthly premiums, saving substantial amounts during that storage period, while maintaining comprehensive coverage to protect the car against theft, fire, and vandalism.
The driver simply contacts the insurer, requests the appropriate changes. The company calculates the new rate based on the coverage changes and the driver pays that lower monthly amount. The same procedure happens in reverse when the storage period is over.
The same technique can be used when paying annually, and the driver would receive a reimbursement. However, the full amount of the annual premium is not outside the driver’s hands for the entire term, and therefore available for the driver to use for other purposes.
Penalties for No Insurance Coverage
Regardless of which payment method you choose for yourself, it’s very important that you have car insurance coverage in place that complies with the minimum coverage requirement for your province. Driving without insurance can not only affect the owner of the vehicle but the driver as well, even when it’s not the owner.
Fines vary across the country. Minimum fines in BC start around $600. Alberta is closer to $3,000 and in Ontario, uninsured drivers face $5,000 plus a victim fine surcharge amounting to a total of $6,250 for a first offense. Suspensions and car impounding are other potential penalties.
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